Al's Morning Meeting

What happened on Wall Street -- what happened to your retirement funds -- Monday has more to do with global selloffs than anything else. At its lowest on Monday, the Dow sank to a level not seen since 2003. The Nasdaq hit a five-year low. At one point, the Dow was down 7.8 percent.
 
That means that a $10,000 investment that mirrored the Dow average would have been worth $9,220 at its low point, though it would've recovered some of that loss by the time the market closed.

The rest of the investment world is focused on problems this week, just as Americans have been for the last two weeks. Stock market trading was suspended in Brazil and Russia Monday. The German government stepped in over the weekend to back up a big failing bank. And the government of Iceland worked over the weekend on its own guarantees.

The Wall Street Journal explains why the credit crunch affects everyone.

What should the average investor do?

Unless you are near retirement and need your money right now, the conventional thinking is change nothing: Ride it out. Why? Because you only lose your investment if you sell low. In fact, the market drop offers nice buying opportunities for those of us who are still a decade or more from retirement.

The Motley Fool offers five ways to "panic proof" your retirement fund.

If you are buying, consider companies that pay dividends. That way you are not just relying on the rising stock price to earn money.

If you want to protect a stock that you own, The Motley Fool says, you could buy what is called a "put option." A "put" is essentially an insurance policy for your most important stocks. Typically, The Motley Fool column says, it would cost you about "$3,000 to $4,000 to insure the typical $20,000 stock position from now through January 2010."

Two Options for Retirement Plans

For baby boomers who are nearing retirement, there are two options open to restoring investments that dropped in the last week:

• Save more aggressively.
• Work longer.

Money Magazine explains both:

Save More

One option is to cut back on spending and put more into your retirement accounts. The problem with this approach is that you need to save a lot more, and in more than just your 401(k), to make up for your losses. So much so that it is probably not doable unless you enjoy some sort of windfall.

Let's assume that before the crash you had $500,000 in retirement savings. That means your 401(k) would now be down to $360,000. To make up the difference in five years, you would have to save an additional $2,800 a month.

And that's only if the market starts going up again at the historic 8 percent a year. If the market continues to drop or treads water, you would have to put away even more. (If you can save more, keep in mind that you can put an additional $5,000 a year in your 401(k) if you are 50 or older.)

A more feasible remedy is to work a few more years. "Adding contributions is not that helpful," says Christine Fahlund, a senior financial planner at T. Rowe Price. "Working more is what really makes a difference."

This strategy boosts your retirement income in two ways. First of all, you can contribute to your 401(k) for longer, adding to your savings. But more important, every extra year of work means one less year you have to live off your savings. You can make bigger retirement withdrawals because you're spreading that nest egg over fewer years.

A recent study by T. Rowe Price found that by working an additional six years, you can boost your retirement account withdrawals by 28 percent -- and that assumes you don't contribute anything else to your savings during those six years.

Media stocks

A handful of media companies gained ground Monday, despite it all. Others didn't lose as much. Take a look at the biggest winners and losers in the media stock category.